Discussion of "Currency Stability Using Blockchain Technology"

【Author】 Sultanum, Bruno

【Source】JOURNAL OF ECONOMIC DYNAMICS & CONTROL

【影响因子】1.620

【Abstract】The volatility of crypto currencies hinders their ability to be media of exchange or stores of value, leading to the implementation of exchange-rate pegs in an attempt to stabilize these currencies. This strategy has been used by crypto currencies such as US Dollar Tether, Steem Backed Dollar and TrueUSD; and was previously adopted in countries such as Brazil, Mexico and Argentina. However, an exchange-rate peg is vulnerable to speculative attacks if it is not 100% backed by reserves, as discussed in Obstfeld (1996). Using insights from the bank-run literature, Routledge and Zetlin-Jones (2018) build on Green and Lin (2003) and propose a model of speculative attacks. They show that adjustments to the exchange rate can prevent speculative attacks in equilibrium. They also show how to implement such contracts using blockchain technology. In this discussion paper, I provide a cautionary tale. I show also in a version of Green and Lin (2003) that the information content in the blockchain prevents agents from attaining all the gains from risk sharing-highlighting the downsides of too much public information. (C) 2021 Elsevier B.V. All rights reserved.

【Keywords】

【发表时间】2022 SEP

【收录时间】2022-09-15

【文献类型】观点阐述

【主题类别】

区块链治理-市场治理-市场分析